1. At the high level of activity in August, 7,000 machine hours were run and power costs were $16,000. In April, a month of low activity, 3,000 machine hours were run and power costs amounted to $8,000. Using the high-low method, what is the estimated fixed cost element of power costs?

$2,000.

$8,000.

$14,000.

$16,000.

2. A company sells a product which has a unit sales price of $5, unit variable cost of $2 and total fixed costs of $180,000. What is the number of units the company must sell to break even?

36,000 units

60,000 units

90,000 units

540,000 units

3. A Company has a contribution margin per unit of $21 and a contribution margin ratio of 60%. How much is the selling price of each unit?

$12.60

$35.00

$50.00

$52.50

4. How much sales are required to earn a target net income of $160,000 if total fixed costs are $300,000 and the contribution margin ratio is 40%.

$500,000

$750,000

$766,667

$1,150,000

5. A Company produces drives for computers, which it sells for $20 each. Each drive costs $15 of variable costs to make. During April, 1,000 drives were sold. Fixed costs for March were $2 per unit for a total of $1,000 for the month. How much is the contribution margin ratio?

20%

25%

75%

80%